Banking system USA remains healthy and Americans can be sure their deposits will be there when they are needed, thanks to the “strong and determined” actions taken after its failure. Silicon Valley Bank Treasury Secretary Janet Yellen said today to prevent the run on deposits that led to its collapse last week.

In a statement to the Senate Finance Committee, Yellen stressed that the emergency measures announced on Sunday by the US Treasury and other regulators to boost public confidence in the banking system following the collapse of the California bank underlined the US government’s determination to protect depositors.

“I can assure the members of the Commission that our banking system is healthy and that Americans can be sure that their deposits will be there when they need them,” the US secretary said.

“This week’s actions demonstrate our strong commitment to keeping savers’ savings safe,” he added.

He said US authorities wanted to protect the funds of Signature Bank and Silicon Valley Bank (SVB) depositors because there was a “serious risk of infection.”

What happened to SVB will be “thoroughly examined”.

These were the minister’s first statements to federal lawmakers since the emergency measures to bail out savers and boost banking sector liquidity were met with relief and surprise on Capitol Hill, where Democrats control the Senate and Republicans control the House of Representatives.

J. Yellen also stressed that the collapse of the SVB was essentially a failure to meet savers’ demands for their money after the Federal Reserve (Fed) hiked rates last year, eroding the value of bond investments it relied on to fund withdrawals. funds by clients. He also cited the high level of uninsured deposits in Silicon Valley as an aggravating factor.

“There was liquidity risk in this situation,” Yellen told the committee. “It will be closely examined what happened at the bank and how this problem started, but it is clear that the collapse of the bank, the reason it was forced to close, was because it could not meet depositors’ withdrawal requests.”

No mention of Credit Suisse

He did not mention the situation around Credit Suisse, whose shares fell yesterday, Wednesday, before regulators promised to provide liquidity to the largest Swiss lender.

Yellen noted that she has been working with the Fed and FDIC to protect all depositors of both banks and has created a new mechanism to give banks access to emergency funds. The Federal Reserve has also made it easier for banks to borrow in emergencies.

“Shareholders and debtors are not protected by the state. It is important that taxpayer money is not used or put at risk as a result of this action,” he told the Committee.

^{Source: APE-MEB, Reuters, AFP.}